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By Hugh Cameron
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After Walgreens entered into a definitive takeover agreement, experts spoke with Newsweek about what the acquisition means for the pharmacy chain and whether the move would impact its planned store closures.
Why It Matters
Walgreens is the second largest pharmacy chain in the country behind CVS, offering health and wellness products and other services in its almost 8,500 stores across the U.S. However, ongoing financial struggles and competition from Amazon's online pharmacy and major retailers, such as Walmart and Target, have forced the company to scale back many of its operations.
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What To Know
In late 2024, Walgreens announced that it would shutter 1,200 locations across the country over the next three years, with 500 set to close in the financial year that runs until September.
Last week, however, parent company Walgreens Boots Alliance (WBA) announced that it had entered into a definitive agreement to be acquired by the retail-focused private equity firm Sycamore Partners for $10 billion. WBA said that with a cash offer of $11.45 per share, other potential considerations and the addition of its liabilities and settlements, the total value could reach up to $23.7 billion.
Walgreens' parent company told Newsweek that it had no additional information regarding the potential effects of the acquisition beyond what was shared in last week's announcement and related Securities and Exchange Commission filings.
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Will the Takeover Affect Walgreens Store Closures?
Some have questioned the type of recovery Walgreens could launch under private ownership, and whether it will be significant enough to reverse its planned store closures.
"I'd imagine their new owners will evaluate heavily both internal data and external data around the communities each of the soon-to-be-closed stores sit within," said Nicole Leinbach Hoffman, the founder and president of the retail-focused newsletter Retail Minded*.* "If I had to guess, they'd still close them, however, to open up dollars to nurture the remaining stores with a refreshed strategy."
Walgreens CEO Tim Wentworth said in an October earnings call that the closures targeted unprofitable stores, enabling the company to focus on its 6,000 profitable locations.
"I suspect that the store closures will continue as planned," Sucharita Kodali, a retail industry analyst at the market research firm Forrester, told Newsweek.
"Unless the wrong stores were marked for closure or the [private equity] firm's approach to closure is different than how Walgreens thought about closures, I suspect it will remain the same," she added.
Sycamore has been involved in similar acquisitions of struggling retailers, such as Staples, and the firm's past strategy has involved selling assets and closing stores to pay down debts and limit operational costs, Reuters reported.
Kodali said the Walgreens case reminded her of the Staples takeover. She suggested that, given the company's extensive recent challenges, the new owners might pursue "an even more aggressive plan to close stores."
Store theft, weak traffic, huge debt and competition in the pharmaceutical space from savings apps, such as GoodRx, were among the issues she cited, along with billions in settlement payments to address opioid-related lawsuits.
What People Are Saying
Nicole Leinbach Hoffman, the founder and president of Retail Minded, told Newsweek: "After years of struggling and losing money, Walgreens' plans to sell to a private equity firm are a promising approach to keep this legacy retailer alive. And more so, hopefully thriving again. Retail historically always changes and has evolution as well, and this sale, I believe, is the opportunity for Walgreens to be reinvented to keep up with the modern consumer and evolved retail alike. As for their internal teams, change is inevitable."
She added: "Maintaining these scheduled closings could be a winning strategy despite the hurdles, job losses and frustrations along the way. Walgreens needs a reset, and these closures combined with this new private equity purchase could be the winning duo to help clear the path of a brighter future for Walgreens."
Sucharita Kodali, a retail industry analyst at Forrester, told Newsweek: "[Private equity] takeovers are usually never good for employees nor really for the retail brand either. It is usually great for any one that is competitive with the company. In this case, it could be a boon for CVS, the Walmart and Target pharmacy businesses and even Amazon's pharma business."
What Happens Next
According to a news release WBA issued on March 6, the takeover remains subject to shareholder approval and is expected to close in the fourth quarter of 2025.
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